Peter Martin

Brisbane under water

As estimates of the financial damage wrought by the Queensland floods climb, the Prime Minister has ruled out loosening the budget purse strings to cope with economic shock.

''We will bring the budget to surplus in 2012-13, and yes that will entail some tough choices,'' Julia Gillard said.

''We do not even know yet and cannot know - it's not possible for anyone to know - what the damage bill is going to be. We are only going to know as floodwaters subside. There may be some tough choices.''

Her determination to cut funds to other areas to fund relief and rebuilding in Queensland was labelled ''dangerous'' by the Reserve Bank board member Warwick McKibbin as news emerged of tumbling export earnings and a stalling of the Queensland economy.

''Look at the size of the Queensland economy relative to Australia. At the moment a fair chunk of it has just stopped,'' Professor McKibbin said.

''If you look at the infrastructure damage and all the networks that have been broken, a hit to the economy of 1 per cent is not out of the question.''

A 1 per cent hit to the economy would cost $13 billion.

The comment, the largest estimate yet for the potential damage, knocked the dollar down over half a US cent to a four-week low of 98.03 US cents and reinforced expectations that a further increase in interest rates was now unlikely for months to come.

Trade figures released yesterday showed coal exports slid 5 per cent in November as the wet weather gathered pace. Flooding has affected more than 40 mines and the Port of Gladstone has abandoned exports.

The ANZ economist Katie Dean said worse was to come with about 75 per cent of Queensland coal production having already stopped.

''Our initial estimate is the floods could drive a 25 per cent fall in coking coal export volumes and around a 9 per cent fall in thermal coal export volumes in January,'' she said. ''This could see exports alone strip 0.5 percentage points from [gross domestic product] in the quarter.''

Australia's trade surplus is expected to slip into deficit.

Forecasters at Rabobank sliced 8 per cent off projected cotton exports. Australia is one of the world's biggest producers.

Cotton price futures jumped 2 per cent after earlier jumping by the maximum 4 per cent permitted on the Chicago exchange.

12 Jan
TOWNS in the Lockyer Valley east of Toowoomba have been hit hard for a second consecutive day by the floodwaters, and grave fears are held for dozens of people still missing in Murphys Creek, Grantham and Withcott.

12 Jan
AT LEAST 10 people are dead in the Queensland floods and there are fears that the toll will more than double. Dozens of people are still unaccounted for, including entire families. Four children are among the dead.

12 Jan
HUGE amounts of water spilling from Wivenhoe Dam will contribute to flooding in Brisbane this week, but the releases are necessary to make way for new water in the catchment and to maintain control of flows, authorities said.

12 Jan
TOWNS in NSW have so far been spared the pain overwhelming Queensland, but thousands of residents have been stranded as rivers have risen and floods have cut off towns around Tenterfield and Grafton.